Masco (MAS) 10-K risk factor changes: FY2018 vs FY2017

[removed: The fundamentals driving our business are cyclical, and adverse] [added: Adverse] changes or uncertainty involving the factors listed above [added: or an economic downturn in the United States or worldwide] could result in a decline in spending on residential repair and remodeling activity and a decline in demand for new home construction, which could adversely affect our results of operations and financial position.

As our customers execute their strategies to reach end consumers through multiple channels, they rely on us to support their efforts with our infrastructure, including maintaining robust and user-friendly websites with sufficient content for consumer research and [removed: to provide] [added: providing] comprehensive supply chain solutions and differentiated product development.

If we are unable to successfully provide this support to our [removed: customers,] [added: customers or if] our [added: customers are unable to successfully execute their strategies, our] brands may lose market share.

If we do not timely and effectively identify and respond to [removed: these] changing [added: consumer] purchasing [removed: practices] [added: practices, including an increase in e-commerce,] and consumer preferences, our relationships with our customers and with consumers could be harmed, the demand for our brands and products could be reduced and our results of operations and financial position could be adversely affected.

In addition, home center retailers, which have historically concentrated their sales efforts on retail consumers and remodelers, are increasingly [removed: marketing] [added: selling] directly to professional contractors and installers, which may [added: adversely] affect our margins on our products that contractors and installers would otherwise buy through our dealers and wholesalers.

As market dynamics change, we may experience a shift in the mix of some products we sell toward more value‑priced or opening price point products, which may affect our [removed: ability to maintain or gain market share and/or our] profitability.

In [removed: 2017,] [added: 2018,] our net sales to The Home Depot were [removed: $2.5] [added: $2.7] billion (approximately [removed: 33] [added: 32] percent of our consolidated net sales), and our net sales to Lowe’s were less than 10 percent of our consolidated net sales.

[removed: Our] [added: In addition, our] relationships with [removed: these customers] [added: our customers, including our home center customers,] may be affected if we increase the amount of business we transact [removed: directly with consumers and professionals.][added: in the e-commerce channel.]

In addition, these home center retailers are granted product exclusivity from time to time, which [added: affects our ability to sell products to other customers and] increases the complexity of our product offerings and our [removed: costs and may affect our ability to offer products to other customers.][added: costs.]

Variability in commodity [removed: costs or] [added: costs,] limited availability of commodities [added: and increasing tariffs] could affect our results of operations and financial position.

Fluctuations in the availability and prices of these commodities [added: have in the past and] could increase the costs of our products.

Our production of products could [removed: also] be affected if we or our suppliers are unable to procure our requirements for these commodities or if a shortage of these commodities drives their prices to levels that are not commercially feasible.

[removed: Further, increases in] [added: Tariffs and rising] energy costs could increase our production and transportation costs.

In addition, water is a significant component of [removed: many of] our architectural coatings products and may be subject to restrictions in certain regions.

It can be difficult for us to pass on to customers [removed: cost increases to cover] our [removed: increased commodity and production costs.][added: cost increases.]

If we are not able to [added: sufficiently] increase the prices of our products or achieve cost savings to offset increased commodity and production costs, [added: including the impact of increasing tariffs,] our results of operations and financial position could be adversely affected.

Occasionally, we [removed: also] may [added: also] use derivative instruments, including commodity futures and swaps.

We are dependent on third‑party suppliers for many of our products and components, and our ability to offer a wide variety of products depends on our ability to obtain an adequate [removed: and/or] [added: and] timely supply of these products and components.

Failure of our suppliers to timely provide us quality products on commercially reasonable terms, or to comply with applicable legal and regulatory requirements, [added: or our policies regarding our supplier business practices,] could have a material adverse effect on our results of operations and financial [removed: position.][added: position or could damage our reputation.]

[removed: Resourcing] [added: Sourcing] these products and components [removed: to] [added: from] another supplier [removed: could take time] [added: is time-consuming] and [removed: involve significant costs.][added: costly.]

Many of the suppliers [removed: upon whom] we rely [added: upon] are located in foreign countries.

The differences in business practices, shipping and delivery [removed: requirements] [added: requirements, changes in economic conditions] and [added: trade policies and] laws and regulations, together with the limited number of suppliers, have increased the complexity of our supply chain logistics and the potential for interruptions in our production scheduling.

There are risks associated with [removed: International] [added: our international] operations and global strategies.

[removed: Approximately 21] [added: In 2018, 19] percent of our sales are made outside of North America (principally in Europe) and are transacted in currencies other than the U.S. dollar.

Risks associated with our international operations include changes in political, monetary and social environments, [added: economic conditions,] labor conditions and practices, the laws, regulations and policies of foreign governments, social and political unrest, terrorist attacks, cultural differences and differences in enforcement of contract and intellectual property rights.

Our results of operations and financial position are also [removed: affected] [added: impacted] by [removed: international economic conditions, primarily] [added: changes] in [removed: Europe.][added: currency exchange rates.]

Unfavorable currency [removed: conversion] [added: exchange] rates, particularly the Euro, the British pound sterling, the Canadian dollar and the Chinese Yuan Renminbi, have in the past adversely affected us, and could adversely affect us in the future.

[removed: As] [added: Additionally, as] the situation involving the United Kingdom’s decision to exit from the European Union develops, we could experience volatility in the currency exchange rates [removed: and/or] [added: or] a change in the demand for our products and services, particularly in our U.K. and European markets, or there could be disruption of our operations and our customers’ and suppliers’ businesses.

These include tax laws, laws regulating competition, anti‑bribery/anti‑corruption and other business practices, and trade regulations, [removed: which may include] [added: including] duties and tariffs.

[removed: While] [added: Additionally, while] it is difficult to assess what changes may occur and the relative effect on our international tax structure, significant changes in how U.S. and foreign jurisdictions tax cross‑border transactions could adversely affect our results of operations and financial position.

We continue to pursue our strategic initiatives of investing in our brands, developing innovative products, and focusing on operational excellence through [removed: our continued deployment of] the Masco Operating System, our methodology to drive growth and [removed: productivity into our business units.][added: productivity.]

Such risks include difficulties realizing expected synergies and economies of scale, diversion of our resources, unforeseen liabilities, issues [added: or conflicts] with [removed: the] [added: our] new or existing customers or suppliers, and difficulties in retaining critical employees of the acquired businesses.

Our failure to address these risks could cause us to incur additional costs [removed: and/or] [added: and] fail to realize the anticipated benefits of our acquisitions and could adversely affect our results of operations and financial position.

[removed: We] [added: From time to time, we] have been affected by a shortage of qualified personnel in certain geographic areas.

We [removed: are making significant investments] [added: continue to invest] in new technology systems throughout our company, including [removed: concurrent] implementations of Enterprise Resource Planning (“ERP”) systems at our [removed: larger] business units.

These interruptions could affect our ability to produce and ship goods to our customers or to timely report financial [removed: results.][added: results and the effectiveness of our internal controls.]

In addition to the consequences that may occur from interruptions in our systems, increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted attacks pose a risk to our information technology [removed: systems, and a cybersecurity breach could disrupt our operations.][added: systems.]

We have [removed: established] [added: implemented] security policies, processes and layers of defense designed to help identify and protect against intentional and unintentional misappropriation or corruption of our systems and information and disruption of our operations.

Despite these efforts, our systems [added: have been and in the future] may be damaged, disrupted, or shut down due to [added: cybersecurity] attacks by unauthorized access, malicious software, undetected intrusion, hardware failures, or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.

These breaches or intrusions could lead to business interruption, exposure of proprietary or confidential information, data corruption, damage to [removed: our reputation and] the reputation of our brands, [added: damage to our relationships with our customers and suppliers,] exposure to litigation, and increased operational costs.

The fundamentals driving our business are cyclical, fluctuating with economic cycles.

We face significant competition and operate in an evolving competitive landscape.

Further, as the e‑commerce channel expands, greater pricing transparency for consumers, continuing conflicts between our existing distribution channels and a need for different distribution methods could affect our results of operations and financial position.

Further, the cost of certain of our raw materials and finished goods is increasing as a result of new tariffs.

Compliance with these laws are costly, and future changes to these laws may require significant management attention and disrupt our operations.

We are subject to a wide variety of federal, state, local and foreign laws and regulations pertaining to:

| | |

| --- | --- |

| • | securities matters; |

| | |

| --- | --- |

| • | taxation; |

| | |

| --- | --- |

| • | anti-bribery/anti-corruption; |

| | |

| --- | --- |

| • | employment matters; |

| | |

| --- | --- |

| • | health and safety; |

| | |

| --- | --- |

| • | the protection of employees and consumers; |

| | |

| --- | --- |

| • | product compliance; |

| | |

| --- | --- |

| • | competition practices; |

| | |

| --- | --- |

| • | trade, including duties and tariffs; |

| | |

| --- | --- |

| • | data privacy and the collection and storage of information; and |

| | |

| --- | --- |

| • | climate change and environmental issues. |

Compliance activities are costly and

We face significant competition.

Further, as these home center retailers expand their markets and targeted customers and as consumer purchasing practices change and e‑commerce increases, conflicts between our existing distribution channels have and will continue to occur, which could affect our results of operations and financial position.

We may not be able to sustain the improved results of our U.S. window business.

Our U.S. window business, Milgard Manufacturing Incorporated (“Milgard”), has experienced operational issues and production inefficiencies.

In addition, Milgard’s phased deployment of a new ERP system to improve its business processes has been complex and requires significant management oversight and resources.

While Milgard’s results are improving, there is no assurance that we will be able to sustain this improvement or that our turnaround plan will continue to be successful.

Milgard has also been affected by a shortage of qualified personnel in certain geographic areas.

If Milgard experiences unanticipated expenses, setbacks or additional disruptions to its operations, our results of operations and financial position could be adversely affected.

Given the inherently unpredictable nature of claims and litigation, we cannot predict with certainty the outcome or effect of any such matter.

We are subject to a wide variety of federal, state, local and foreign government laws and regulations, including securities laws, tax laws, anti-bribery/anti-corruption laws and employment laws, as well as those pertaining to health and safety (including protection of employees and consumers), product compliance, competition practices, import and export regulations, data privacy and the collection and storage of information, climate change and environmental issues.

Current and former employees, contractors or suppliers

Forward-looking statements can be identified by words such as [added: "outlook,"] "believe," "anticipate," "appear," "may," "will," "should," "intend," "plan," "estimate," "expect," "assume," "seek," [removed: "forecast"] [added: "forecast,"] and similar references to future periods.

In addition to the various factors included in the "Executive Level Overview," "Critical Accounting Policies and Estimates" and "Outlook for the Company" sections, our future performance may be affected by the levels of residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop new products, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of raw [removed: materials,] [added: materials and increasing tariffs,] our dependence on third-party suppliers, risks associated with international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, [removed: our ability to achieve the anticipated benefits from our investments in new technology,] risks associated with our reliance on information systems and technology, and our ability to [removed: sustain] [added: achieve] the [removed: improved results of] [added: anticipated benefits from] our [removed: U.S. window business.][added: investments in new technology.]

Net sales were [added: also] positively [removed: affected] [added: impacted] by increased sales volume resulting from increased repair and remodel activity and new home [removed: construction, net selling price increases] [added: construction] in [removed: Europe and] the U.S., and [removed: favorable sales mix] [added: net selling price increases primarily] in the U.S. Such increases were partially offset by the [removed: divestitures] [added: divestiture] of [removed: Arrow and Moores,] [added: Moores Furniture Group Limited ("Moores") in the fourth quarter of 2017] and [removed: unfavorable sales mix] [added: Arrow Fastener Co., LLC ("Arrow")] in [removed: Europe.][added: the second quarter of 2017.]

[removed: Our results of operations were] [added: Operating profit margin in 2017 was] positively [removed: affected] [added: impacted] by increased sales volume, cost savings [removed: initiatives] [added: initiatives,] and a more favorable relationship between net selling prices and commodity [removed: costs in Europe.][added: costs.]

[removed: Our Plumbing Products] [added: Operating margins in this] segment [removed: benefited from] [added: in 2017 were positively impacted by] increased sales volume, cost savings [removed: initiatives] [added: initiatives,] and a favorable relationship between net selling prices and commodity costs, [removed: and was negatively impacted] [added: partially offset] by an increase in [removed: investments in] strategic growth initiatives and certain other expenses (including trade show costs and [removed: increased head count).][added: higher headcount).]

[removed: Our Decorative Architectural Products] [added: Operating margins in this] segment [removed: was] [added: in 2017 were] negatively affected by an unfavorable relationship between net selling prices and commodity costs of paints and other coating products, and an increase in strategic growth investments to support the expansion of pro paint sales and new programs in [removed: builder's hardware, and was positively impacted by increased sales volume and cost savings initiatives.][added: builders' hardware.]

[removed: Our Cabinetry Products] [added: Operating margins in this] segment [removed: was positively affected by cost savings initiatives as well as favorable sales mix and was negatively affected by] [added: were slightly lower in 2017 due to] decreased sales volume, costs to support new product launches in North America, anti-dumping and countervailing duties, and an unfavorable relationship between net selling prices and commodity [removed: costs.][added: costs of North American cabinets which were mostly offset by cost savings initiatives as well as positive sales mix of North American cabinets.]

[removed: Our Windows and Other Specialty Products] [added: Operating margins in this] segment [removed: benefited from] [added: in 2017 were positively affected by] a decrease in warranty adjustments, [removed: as well as] cost savings initiatives and a favorable relationship between net selling prices and commodity [removed: costs.][added: costs of North American windows.]

We [removed: record estimated reductions to revenue for] [added: provide] customer programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives.

In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, [removed: including capital expenditures,] and, currently, a two [added: to three] percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast.

[removed: Our assumptions included a relatively] stable U.S. Gross Domestic Product growing at approximately [removed: 2.3] [added: 2.5] percent per annum and a [removed: euro zone] [added: eurozone] Gross Domestic Product growing at approximately [removed: 1.5 to 1.7] [added: 1.9] percent per annum over the five-year forecast.

We utilize our weighted average cost of capital of approximately [removed: 8.0] [added: 9.0] percent as the basis to determine the discount rate to apply to the estimated future cash flows.

In [removed: 2017,] [added: 2018,] based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of [removed: 10.0] [added: 11.0] percent to [removed: 13.0] [added: 13.5] percent for our reporting units.

In the fourth quarter of [removed: 2017,] [added: 2018,] we estimated that future discounted cash flows projected for all of our reporting units were greater than the carrying values.

[removed: In 2017,] [added: Accordingly,] we did not recognize any impairment charges for other indefinite-lived intangible assets.

As of January 1, 2010, substantially all [removed: of] our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals.

In December [removed: 2017,] [added: 2018,] our discount rate for obligations [removed: decreased] [added: increased] to a weighted average of [removed: 3.3] [added: 3.8] percent from [removed: 3.5] [added: 3.3] percent.

The discount rate for obligations is based upon the expected duration of each defined-benefit pension plan's liabilities matched to the December 31, [removed: 2017] [added: 2018] Willis Towers Watson Rate Link [removed: curve.][added: Curve.]

The discount rates we use for our defined-benefit pension plans ranged from 1.5 percent to [removed: 3.6] [added: 4.2] percent, with the most significant portion of the liabilities having a discount rate for obligations of [removed: 3.4] [added: 4.1] percent or higher.

The assumed asset return was primarily [removed: 7.25] [added: 7.0] percent, reflecting the expected long-term return on plan assets based upon an analysis of expected and historical rates of return of various asset classes utilizing the current and long-term [added: target] asset allocation of the plan assets.

Our net underfunded amount for our qualified defined-benefit pension plans, which is the difference between the projected benefit obligation and plan assets, decreased to [removed: $266] [added: $226] million at December 31, [removed: 2017] [added: 2018] from [removed: $338] [added: $266] million at [removed: December 31, 2016.]

Our projected benefit obligation for our unfunded, non-qualified, defined-benefit pension plans [removed: was] [added: decreased to $155 million at December 31, 2018 from] $170 million at [removed: both] December 31, [removed: 2017 and 2016.][added: 2017.]

In accordance with the Pension Protection Act, the Adjusted Funding Target Attainment Percentage for the various defined-benefit pension plans ranges from [removed: 80] [added: 90] percent to [removed: 108] [added: 115] percent.

The decrease in our qualified defined-benefit pension plan projected benefit obligation was [removed: impacted] primarily [added: impacted] by [removed: the divestiture of Moores, due to the transfer of $144 million of plan obligations to the purchaser] [added: an increase] in [removed: connection with] the [removed: sale of the business.][added: discount rate.]

During [removed: 2017,] [added: 2018,] we contributed $52 million to our qualified defined-benefit pension [removed: plans.][added: plans, and our qualified defined-benefit pension plan assets had a return of negative 4.9 percent.]

Refer to Note [removed: L] [added: M] to the consolidated financial statements for additional information.

We expect pension expense for our qualified defined-benefit pension plans to be [removed: $12] [added: $16] million in [removed: 2018] [added: 2019] compared with [removed: $20] [added: $8] million in [removed: 2017.][added: 2018.]

If we assumed that the future return on plan assets was [removed: one-half percent] [added: 50 basis points] lower than the assumed asset return and the discount rate decreased by 50 basis points, the [removed: 2018] [added: 2019] pension expense would increase by $4 million.

We expect pension expense for our non-qualified defined-benefit pension plans to be $8 million in [removed: 2018,] [added: 2019,] compared to $9 million in [removed: 2017.][added: 2018.]

We anticipate that we will be required to contribute approximately [removed: $25] [added: $15] million in [removed: 2018] [added: 2019] to our qualified and non-qualified defined-benefit plans; however, we currently anticipate contributing approximately [removed: $61] [added: $66] million in [removed: 2018.][added: 2019.]

Refer to Note [removed: L] [added: M] to the consolidated financial statements for further information regarding the funding of our plans.

Deferred taxes are recognized based on the future tax consequences of differences between the financial [removed: statement carrying value of assets and liabilities and their respective tax basis.]

[removed: The future realization of deferred tax] assets depends on the existence of sufficient taxable income in future periods.

[removed: Possible sources of taxable income] include taxable income in carryback periods, the future reversal of existing taxable temporary differences recorded as a deferred tax liability, tax-planning strategies that generate future income or gains in excess of anticipated losses in the carryforward period and projected future taxable income.

We maintain a valuation allowance on certain state and foreign deferred tax assets as of December 31, [removed: 2017.][added: 2018.]

We believe that there is an increased potential for volatility in our effective tax rate because this threshold allows [added: for] changes in the income tax environment [removed: and] [added: and, to a greater extent,] the inherent complexities of income tax law in a substantial number of [removed: jurisdictions to] [added: jurisdictions, which may] affect the computation of our liability for uncertain tax [removed: positions to a greater extent.][added: positions.]

While we believe we have adequately provided for our uncertain tax positions, amounts asserted by taxing [removed: authorities could vary from our liability for uncertain tax positions.]

[removed: Accordingly, additional provisions for tax-related] matters, including interest and penalties, could be recorded in income tax expense in the period revised estimates are made or the underlying matters are settled or otherwise resolved.

The comprehensive U.S. tax reform, which [removed: is] generally [added: became] effective in [removed: 2018, is expected to have] [added: 2018 has had] a significant impact on our effective tax rate and taxes paid primarily due to the reduction in the U.S. Federal corporate tax rate from 35 percent to 21 percent and the additional U.S. [removed: and foreign] taxes on our foreign earnings.

The [added: continued] impact from U.S. tax reform may differ from our current estimates due to the issuance [added: and finalization] of future regulatory [removed: guidance that differs from our current interpretation.][added: guidance.]

2018 Results

Net sales were positively impacted by the acquisition of The L.D. Kichler Co. ("Kichler") in March 2018 and Mercury Plastics, Inc. ("Mercury") in December 2017.

Our results of operations were negatively impacted by increased other expenses, such as logistics costs, salaries, and Enterprise Resource Planning System ("ERP") costs, and the recognition of the inventory step up adjustment established as part of the acquisition of Kichler.

Such negative impacts were partially offset by benefits associated with cost savings initiatives and increased sales volume.

Our Plumbing Products segment was negatively impacted by an increase in commodity costs, unfavorable sales mix, and an increase in other expenses (such as salaries, logistics costs and ERP costs).

These negative impacts were partially offset by increased sales volume, the benefits associated with cost savings initiatives and increased net selling prices.

Our Decorative Architectural Products segment was negatively impacted by an increase in commodity costs, the recognition of the inventory step up adjustment established as part of the acquisition of Kichler, and increased depreciation and amortization expense.

These negative impacts were partially offset by increased net selling prices of paints and other coating products, benefits associated with cost savings initiatives and increased sales volume.

Our Cabinetry Products segment was negatively impacted by an increase in other expenses (such as logistics costs), program launch and display expenses, and unfavorable sales mix.

These negative impacts were partially offset by benefits associated with cost savings initiatives, increased sales volume and the divestiture of Moores.

Our Windows and Other Specialty Products segment was negatively impacted by an increase in other expenses (such as warranty-related costs and higher labor costs), an increase in commodity costs, decreased sales volume and the divestiture of Arrow.

These negative impacts were partially offset by increased net selling prices and the benefits associated with cost savings initiatives.

We recognize revenue as control of our products is transferred to our customers, which is generally at the time of shipment or upon delivery based on the contractual terms with our customers, or when services are completed.

Control over certain of our custom-made window products transfers to our customers as production is completed, and revenue is recognized over the production period for these products, as our products do not have an alternative use and we have an enforceable right to payment during the production period.

The production period of our custom-made window products generally does not lapse days, and for these products we currently recognize revenue based on the output of production, which is a faithful depiction of the transfer of these products to our customers.

These customer programs and incentives are considered variable consideration.

We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved.

This determination is made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives.

This determination is updated each reporting period.

Our assumptions included a relatively

Our weighted average cost of capital increased in 2018 as compared to 2017, primarily due to an increased market required rate of return on equity, as well as an increase in the after-tax cost of debt, which was driven by a reduction in the effective tax rate.

Potential impairment is identified by comparing the fair value of an other indefinite-lived intangible asset to its carrying value.

We utilized a relief-from-royalty model to estimate the fair value of other indefinite-lived intangible assets.

We also consider the profitability of the business, among other factors, to determine the royalty rate for use in the impairment assessment.

We utilize our weighted average cost of capital of approximately 9.0 percent as the basis to determine the discount rate to apply to the estimated future cash flows.

In 2018, based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of 12.0 percent to 13.5 percent for our other indefinite-lived intangible assets.

In the fourth quarter of 2018, we estimated that future discounted cash flows projected for our other indefinite-lived intangible assets were greater than the carrying values.

A 10 percent decrease in the estimated fair value of our other indefinite-lived intangible assets would have resulted in a $4 million impairment for trade names related to businesses acquired within the past two years.

statement carrying value of assets and liabilities and their respective tax basis.

The future realization of deferred tax

Possible sources of taxable income

authorities could vary from our liability for uncertain tax positions.

Accordingly, additional provisions for tax-related

At the time of sale, we accrue a warranty liability for the estimated future

When a liability is probable of being incurred and our exposure in these matters is reasonably estimable, amounts are recorded as charges to earnings.

On March 9, 2018, we acquired substantially all of the net assets of Kichler.

The purchase price, net of $2 million cash acquired, consisted of $549 million paid with cash on hand.

The decrease in our current ratio is due primarily to the cash on hand we paid for our acquisition of Kichler, partially offset by the acquired working capital.

| | 2018 | | | 2017 | |

These amounts were partially offset by contributions to our defined-benefit pension plans.

2017 Results

Such increases were partially offset by an increase in strategic growth investments and certain other expenses, including stock-based compensation, health insurance costs, trade show costs and increased head count.

We recognize revenue as title to products and risk of loss is transferred to customers or when services are rendered.

Our weighted average cost of capital decreased in 2017 as compared to 2016, primarily due to reductions in the risk free rate.

A change to the MP 2017 Mortality Improvement Scale also decreased our long-term pension liabilities.

The decrease was partially offset by a lower discount rate compared to the prior year.

Additionally, our qualified defined-benefit pension plan assets had a net gain of 13.9 percent in 2017.

As a result of this new legislation, we currently anticipate our effective tax rate in 2018 to be approximately 26 percent.

We intend to allocate the benefit from lower cash tax payments to our existing capital allocation strategy.

When estimates of our exposure in these matters meet the criteria for recognition under accounting guidance, amounts are recorded as charges to earnings.

On March 24, 2015, we issued $500 million of 4.45% Notes due April 1, 2025.

In December 2017, we signed a definitive agreement to acquire The L.D. Kichler Co. ("Kichler"), a leader in decorative residential and light commercial lighting products, ceiling fans and LED lighting systems.

This business will expand our product offerings to repair and remodel customers.

We expect this transaction to close in the first quarter of 2018, at which time we expect to pay approximately $550 million for the business, using cash on hand.

We intend to report this business in our Decorative Architectural Products segment.

| Cash distributed to TopBuild Corp. | — | | | | — | | | | (63 | | ) |

| Issuance of TopBuild Corp. debt | — | | | | — | | | | 200 | | |

These amounts were partially offset by changes in working capital, resulting primarily from an increase in inventory levels to support our growth and new programs and changes in contract terms with certain customers.

Net cash provided by operations was also impacted by contributions to our defined-benefit pension plans.

Net cash used for financing activities was $577 million, primarily due to the early retirement of $299 million of our 7.125% Notes due March 15, 2020, $74 million of our 5.95% Notes due March 15, 2022, $62 million of our 7.75% Notes due August 1, 2029, and $100 million of our 6.5% Notes due August 15, 2032, and related extinguishment costs of $104 million.

These amounts were partially offset by the issuance of $300 million of 3.5% Notes due November 15, 2027 and $300 million of 4.5% Notes due May 15, 2047.

Net sales for 2015 were negatively affected by lower sales volume of cabinets and lower net selling prices of paints and other coating products.

2016 gross profit margins were negatively impacted by an increase in warranty costs resulting from a change in our estimate of expected future warranty claim costs.

Selling, general and administrative expenses as a percent of sales in 2017 reflect increased sales and the effect of cost containment measures, partially offset by an increase in strategic growth investments, stock-based compensation, health insurance costs and trade show costs.

Selling, general and administrative expenses as a percent of sales in 2016 reflect strategic growth investments, ERP system implementation costs and higher insurance costs.

| Operating profit, as reported | $ | 1,169 | | | $ | 1,053 | | | $ | 914 | |

| Gain from sale of property and equipment | — | | | | — | | | | (5 | | ) |

| Operating profit, as adjusted | $ | 1,173 | | | $ | 1,075 | | | $ | 927 | |

Operating profit margin in 2016 was negatively impacted by an increase in warranty costs by a business in our Windows and Other Specialty Products segment and an increase in strategic growth investments, as well as ERP system implementation costs and higher insurance costs.

Other, net for 2016 also included realized foreign currency losses of $3 million and other miscellaneous items.

Other, net, for 2015 included net gains of $6 million from distributions from private equity funds and $2 million of earnings from equity investments.

Compared to our normalized tax rate of 36 percent, the variance in 2015 is due primarily to a $21 million valuation allowance against certain deferred tax assets of TopBuild recorded as a non-cash charge to income tax expense.

The TopBuild deferred tax assets have been impaired by our decision to spin off TopBuild into a separate company that on a stand-alone basis as of June 30, 2015, the spin off date, was unlikely to be able to realize the value of such deferred tax assets as a result of its history of losses.

The 2015 effective tax rate also includes a $19 million charge to income tax expense to recognize the required taxes on substantially all undistributed foreign earnings, except for those that are legally restricted.

This charge was the result of our determination that we may need to repatriate earnings from certain foreign subsidiaries that were previously considered permanently reinvested in order to provide greater flexibility in the execution of our capital management strategy.

We believe the fundamentals of our industry remain strong and support long-term growth of our products.

| Plumbing Products | $ | 3,735 | | | $ | 3,526 | | | $ | 3,341 | | | 6 | % | | 6 | % |

| Total | $ | 7,644 | | | $ | 7,357 | | | $ | 7,142 | | | 4 | % | | 3 | % |

| North America | $ | 6,069 | | | $ | 5,834 | | | $ | 5,645 | | | 4 | % | | 3 | % |

| Total | $ | 7,644 | | | $ | 7,357 | | | $ | 7,142 | | | 4 | % | | 3 | % |

Refer to Note [removed: E] [added: F] to the consolidated financial statements for additional information regarding our derivative instruments.

At December 31, [removed: 2017,] [added: 2018,] we performed sensitivity analyses to assess the potential loss in the fair values of market risk sensitive instruments resulting from a hypothetical change of 10 percent in foreign currency exchange rates, a 10 percent decline in the market value of our long-term investments, or a 100 basis point change in interest rates.

Our portfolio of industry-leading brands includes BEHR® paint; DELTA® and HANSGROHE® faucets and bath and shower fixtures; KRAFTMAID® and MERILLAT® cabinets; MILGARD® windows and doors; [added: KICHLER® decorative] and [added: outdoor lighting; and] HOT SPRING® spas.

We believe that our solid results of operations and financial position for [removed: 2017] [added: 2018] resulted from our continued focus on our three strategic pillars: driving the full potential of our core businesses, leveraging opportunities across our businesses, and actively managing our portfolio.

[added: | • |] To drive the full potential of our core [removed: businesses during 2017,] [added: businesses,] we continued to pursue sales growth opportunities by introducing new products, enhancing services and penetrating adjacent markets. [added: In addition, we continued to reduce costs and capitalize on synergies across our businesses with standardized operating tools, cost saving initiatives and the implementation of lean principles and process improvements in many areas, including production and functional support processes. |]

[added: | • |] We [added: also] continued to [removed: realize] [added: leverage the collective strength of our enterprise as we developed talent, facilitated operational improvements and realized] supply chain efficiencies through strategic sourcing and [removed: to share] [added: sharing] best practices across all of our functional [removed: departments to enhance productivity.][added: departments. |]

[added: | • | We actively managed our portfolio and completed the acquisition of The L.D. Kichler Co. ("Kichler") in 2018, and we remain committed to making selective acquisitions in attractive end markets.] In addition, we repurchased over [removed: 9] [added: 18] million shares of our common stock and increased our quarterly dividend by [removed: 5] [added: 14] percent, which further enhanced value for our shareholders. [added: |]

We believe that the actions we have taken over the last few years, combined with the Masco Operating System, our methodology to drive growth and productivity, have positioned us to further enhance shareholder [removed: value through strong and consistent growth.][added: value.]

We report our financial results in four [removed: business] segments aggregated by similarity in products.

All of our [removed: operating] segments, except the Plumbing Products segment, normally experience stronger sales during the second and third calendar quarters, corresponding with the peak season for repair and remodel activity and new home construction.

| • | The majority of our faucet, sink, bathing and showering products are sold in North America and Europe under the brand names DELTA®, BRIZO®, PEERLESS®, HANSGROHE®, AXOR®, GINGER®, NEWPORT BRASS®, BRASSTECH® and WALTEC®. Our BRISTAN™ and HERITAGE™ products are sold primarily in the United Kingdom. These plumbing products include faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower [added: bases and] enclosures and toilets. We sell these products to home center and online retailers and to wholesalers and distributors that, in turn, sell them to plumbers, building contractors, remodelers, smaller retailers and consumers. |

| • | We manufacture acrylic tubs, bath and shower enclosure units, and shower [added: bases and] trays. Our DELTA, PEERLESS and MIROLIN® products are sold primarily to home center retailers in North America. Our MIROLIN products are also sold to wholesalers and distributors in Canada. Our HÜPPE® shower enclosures and shower trays are sold through wholesale channels primarily in Europe. |

| • | Our [removed: spas and] [added: spas,] exercise pools and [added: fitness] systems are manufactured and sold under our HOT SPRING®, CALDERA®, FREEFLOW SPAS®, FANTASY SPAS® and ENDLESS POOLS® brands, as well as under other trademarks. Our spa [removed: products] and exercise pools are sold worldwide to independent specialty retailers and distributors and to online mass merchant retailers. Certain exercise pools are also available on a consumer-direct basis in North America and Europe, while our fitness systems are sold through independent specialty retailers as well as on a consumer-direct [removed: basis.] [added: basis in some areas.] |

| • | Also included in our Plumbing Products segment are brass, copper and composite plumbing system components and other non-decorative plumbing products that are sold to plumbing, heating and hardware wholesalers, home center and [removed: e-commerce] [added: online] retailers, hardware stores, building supply outlets and other mass merchandisers. These products are marketed primarily in North America under our BRASSCRAFT®, PLUMB SHOP®, COBRA®, COBRA [removed: PRO™,] [added: PRO™] and MASTER PLUMBER® brands and are also sold under private label. |

Competitors of the majority of our products in this segment include Lixil Group Corporation’s American Standard Brands and Grohe products, Kohler Co., Fortune Brands Home & [removed: Security] [added: Security,] Inc.'s Moen, Rohl and Riobel brands and Spectrum Brands Holdings, LLC’s Pfister faucets.

Competitors of our spas and exercise pools and systems include [removed: Jacuzzi,] [added: Artesian, Jacuzzi and] Master Spas [removed: and Dynasty Spas.][added: brands.]

[added: The businesses in] our Plumbing Products segment manufacture products in North America, Europe and Asia and source products from Asia and other regions.

We produce architectural coatings, including paints, primers, specialty [removed: paints,] [added: coatings,] stains and waterproofing products.

Net sales of architectural coatings comprised approximately [added: 24 percent of our consolidated net sales in 2018 and] 25 percent of our consolidated net sales in [removed: 2017, 2016] [added: 2017] and [removed: 2015.][added: 2016.]

Our competitors in this segment include large national and international brands such as Benjamin [removed: Moore,] [added: Moore & Co., PPG Industries, Inc. (with its] Glidden, Olympic, PPG, [removed: Sherwin‑Williams,] [added: and Pittsburgh Paint brands), The Sherwin‑Williams Company (with its Sherwin-Williams and] Valspar [added: brands as well as Thompson’s Water Seal,] and [removed: Zinsser,] [added: Minwax brands) and RPM International, Inc. (with its Rust-Oleum and Zinsser brands),] as well as many regional and other national brands.

Titanium dioxide [removed: is a] [added: and acrylic resins are] major [removed: ingredient] [added: raw materials] in the manufacture of architectural coatings.

Our Decorative Architectural Products segment also includes branded [removed: cabinet, door] [added: cabinet] and [removed: window] [added: door] hardware, functional hardware, [removed: glass shower doors,] wall plates, hook and rail products, and picture hanging accessories, which are manufactured for us and sold to home center retailers, mass retailers, [removed: e-commerce] [added: online] retailers, other specialty retailers, original equipment manufacturers and wholesalers.

These products are sold under the LIBERTY®, [removed: BRAINERD®] [added: BRAINERD®, FRANKLIN BRASS®] and other trademarks, and our key competitors in North America include Amerock, Top Knobs, Richelieu and private label brands.

Decorative bath hardware, shower accessories, and shower doors are sold under the brand names DELTA® and FRANKLIN BRASS® [added: and other trademarks] to wholesalers, home center retailers, mass retailers and other specialty retailers.

Competitors for these products include [removed: Moen,] Kohler, [removed: Gatco] [added: Moen] and private label brands.

We believe that competition in this industry is based largely on product features and selection, product [removed: quality,] [added: quality] and price.

Our competitors in this segment include American Woodmark Corporation, [added: Elkay Manufacturing Company, Inc. and] Fortune Brands Home & Security, Inc. [removed: and Elkay.]

The raw materials used in this segment are primarily hardwood lumber, plywood and [removed: particleboard,] [added: particleboard] and are available from multiple sources, both domestic and foreign.

Some of the materials we import may be subject to [removed: customs duties.][added: duties and tariffs.]

Our North American competitors for these products include national brands, such as [added: Andersen,] Jeld‑Wen, Marvin, Pella, [removed: Ply Gem] and [removed: Andersen,] [added: Ply Gem,] and numerous regional brands.

We do not expect that compliance with the federal, [removed: state and] [added: state,] local [added: and foreign] regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, will result in material capital expenditures or have a material adverse effect on our competitive position or results of operations and financial position.

At December 31, [removed: 2017,] [added: 2018,] we employed approximately 26,000 people.

We will continue to focus on our disciplined execution of our strategy in 2019.

Masco was incorporated under the laws of Michigan in 1929 and was reincorporated under the laws of Delaware in 1968.

| • | We also supply high-quality, custom thermoplastic extrusions, extruded plastic profiles and specialized fabrications to manufacturers, distributors and wholesalers for use in diverse applications that include faucets and plumbing supplies, appliances, oil and gas equipment, building products and automotive components. |

In addition, some of the products in this segment that we import may be subject to duties and tariffs.

The price of acrylic resins fluctuates based on the price of its components, which can also have a material impact on our costs and results of operations in this segment.

In addition, the prices of crude oil, natural gas and certain petroleum by-products can

also impact our costs and results of operations in this segment.

During 2018, we expanded this segment with our acquisition of Kichler lighting products, which include decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting and LED lighting systems.

These products are sold to home center retailers, online retailers, electrical distributors, landscape distributors and lighting showrooms under the brand names KICHLER® and ÉLAN® and under other trademarks.

Competitors of these products include FX Luminaire, Hinkley Lighting, Inc., Hunter Fan Company, Progress Lighting, Inc. and private label brands.

We import certain materials and products for this segment that may be subject to duties and tariffs.

| | |

| --- | --- |

| | |

| --- | --- |

In addition, we continued to reduce costs and capitalize on synergies across our businesses with standardized operating tools, cost saving initiatives and the implementation of lean principles and process improvements in many areas, including production and functional support processes.

As a result, we grew both our top and bottom lines.

We also continued to leverage the collective strength of our enterprise, the second pillar of our strategy.

We provided new assignments to selected leaders across our business units to further develop talent and facilitate operational improvements.

We believe this contributed to our results of operations improving as compared to the prior year.

Additionally, we continued to actively manage our portfolio, the third pillar of our strategy, and remain committed to making selective acquisitions in attractive end markets.

During 2017, we acquired a U.S. plastics processor and manufacturer of water handling systems in our Plumbing Products segment and signed a definitive agreement to acquire The L.D. Kichler Co., a leader in decorative residential and light commercial lighting products, ceiling fans and LED lighting systems, which is expected to close in the first quarter of 2018.

We also divested our U.S. fastener and tool business and our U.K. manufacturer of kitchen and bathroom furniture business.

We will continue to actively manage our portfolio, identify growth opportunities in key industries and create new products that differentiate us in the marketplace by combining design and innovation.

By focusing on our disciplined execution of our strategy, we believe that our positive momentum will continue.

The following tables set forth the contribution of our segments to net sales and operating profit (loss) for the three-year period ended December 31, 2017.

Additional financial information concerning our operations by segment and by geographic regions, as well as general corporate expense, net, as of and for the three-year period ended December 31, 2017, is set forth in Note O to the consolidated financial statements included in Item 8 of this Report.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | (In Millions) | | | | | | | | | | |

| | Net Sales (1) | | | | | | | | | | |

| | 2017 | | | | 2016 | | | | 2015 | | |

| Plumbing Products | $ | 3,735 | | | $ | 3,526 | | | $ | 3,341 | |

| Decorative Architectural Products | 2,205 | | | | 2,092 | | | | 2,020 | | |

| Cabinetry Products | 934 | | | | 970 | | | | 1,025 | | |

| Windows and Other Specialty Products | 770 | | | | 769 | | | | 756 | | |

| Total | $ | 7,644 | | | $ | 7,357 | | | $ | 7,142 | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | (In Millions) | | | | | | | | | | |

| | Operating Profit (Loss) (1)(2) | | | | | | | | | | |

| | 2017 | | | | 2016 | | | | 2015 | | |

| Plumbing Products | $ | 698 | | | $ | 642 | | | $ | 512 | |

| Decorative Architectural Products | 434 | | | | 430 | | | | 403 | | |

| Cabinetry Products | 90 | | | | 93 | | | | 51 | | |

| Windows and Other Specialty Products | 52 | | | | (3 | | ) | | 57 | | |

| Total | $ | 1,274 | | | $ | 1,162 | | | $ | 1,023 | |

___________________________________

| (1) | Amounts exclude discontinued operations. |

| (2) | Operating profit (loss) is before general corporate expense, net. Refer to Note O to the consolidated financial statements for additional information. |

The businesses in

In the fourth quarter of 2017, we acquired Mercury Plastics, Inc. ("Mercury"), a U.S. plastics processor and manufacturer of water handling systems.

This acquisition enhances our ability to develop faucet technology and provides continuity of supply of quality faucet components.

Information regarding legal proceedings involving us is set forth in Note [removed: S] [added: T] to the consolidated financial statements included in Item 8 of this Report and is incorporated herein by reference.

For the Fiscal Year Ended December 31, [removed: 2017] [added: 2018] Commission File Number 1-5794

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities [removed: Act.][added: Act.Yes þ No o]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T [added: (§ 232.405 of this chapter)] during the preceding 12 months (or [added: for] such shorter period that the registrant was required to submit [removed: and post] such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [added: o]

The aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant on June 30, [removed: 2017] [added: 2018] (based on the closing sale price of [removed: $38.21] [added: $37.42] of the Registrant's Common Stock, as reported by the New York Stock Exchange on such date) was approximately [removed: $12,100,656,000.][added: $11,345,157,000.]

Number of shares outstanding of the Registrant's Common Stock at January 31, [removed: 2018:][added: 2019:]

[removed: 313,391,500] [added: 294,492,500] shares of Common Stock, par value $1.00 per share

Portions of the Registrant's definitive Proxy Statement to be filed for its [removed: 2018] [added: 2019] Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

[removed: 2017] [added: 2018] Annual Report on Form 10-K

| [removed: [1A.](#s3BEEEFA862C9508387CF823066D9D6E3)] [added: [1A.](#sD5787B32BC6353ADA1C190A212A77BE5)] | | [Risk [removed: Factors](#s3BEEEFA862C9508387CF823066D9D6E3)] [added: Factors](#sD5787B32BC6353ADA1C190A212A77BE5)] | | [removed: [7](#s3BEEEFA862C9508387CF823066D9D6E3)] [added: [6](#sD5787B32BC6353ADA1C190A212A77BE5)] |

| [removed: [1B.](#s33441CC8C22A5B2EAE4C6FAA625702B2)] [added: [1B.](#sB1D0B3B5C02350C593B8AF13AB618960)] | | [Unresolved Staff [removed: Comments](#s33441CC8C22A5B2EAE4C6FAA625702B2)] [added: Comments](#sB1D0B3B5C02350C593B8AF13AB618960)] | | [removed: [12](#s33441CC8C22A5B2EAE4C6FAA625702B2)] [added: [11](#sB1D0B3B5C02350C593B8AF13AB618960)] |

| [removed: [3.](#s39FDE864A87258C8BE02F52B2A061E4A)] [added: [3.](#s8902764EA3195B2C9B49F71419D67DA9)] | | [Legal [removed: Proceedings](#s39FDE864A87258C8BE02F52B2A061E4A)] [added: Proceedings](#s8902764EA3195B2C9B49F71419D67DA9)] | | [removed: [13](#s39FDE864A87258C8BE02F52B2A061E4A)] [added: [12](#s8902764EA3195B2C9B49F71419D67DA9)] |

| [removed: [4.](#s50C1FC140F115B9D9BFFD6403D55C546)] [added: [4.](#s3395E18FB1AA54758B079F2F70CE06E4)] | | [Mine Safety [removed: Disclosures](#s50C1FC140F115B9D9BFFD6403D55C546)] [added: Disclosures](#s3395E18FB1AA54758B079F2F70CE06E4)] | | [removed: [13](#s50C1FC140F115B9D9BFFD6403D55C546)] [added: [12](#s3395E18FB1AA54758B079F2F70CE06E4)] |

| [removed: [5.](#s2692EF7F2A6B52CE88C89CE644153764)] [added: [5.](#sC9CAE54400195C5082041DE9E88A002A)] | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s2692EF7F2A6B52CE88C89CE644153764)] [added: Securities](#sC9CAE54400195C5082041DE9E88A002A)] | | [removed: [14](#s2692EF7F2A6B52CE88C89CE644153764)] [added: [13](#sC9CAE54400195C5082041DE9E88A002A)] |

| [removed: [6.](#s194F469CCD275C79976C966B0AE0C1FD)] [added: [6.](#s9528C27456B753FBA48F3C40E5C4B9E1)] | | [Selected Financial [removed: Data](#s194F469CCD275C79976C966B0AE0C1FD)] [added: Data](#s9528C27456B753FBA48F3C40E5C4B9E1)] | | [removed: [16](#s194F469CCD275C79976C966B0AE0C1FD)] [added: [15](#s9528C27456B753FBA48F3C40E5C4B9E1)] |

| [removed: [7.](#s008F6834AF095924B5D985A5B895EA5E)] [added: [7.](#sAC261393E38D54D4A90CFF3D9B794442)] | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s008F6834AF095924B5D985A5B895EA5E)] [added: Operations](#sAC261393E38D54D4A90CFF3D9B794442)] | | [removed: [17](#s008F6834AF095924B5D985A5B895EA5E)] [added: [16](#sAC261393E38D54D4A90CFF3D9B794442)] |

| [removed: [7A.](#s43779132BB895EDCB818E308721BA907)] [added: [7A.](#sC525704007495267BA66680E09641C90)] | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s43779132BB895EDCB818E308721BA907)] [added: Risk](#sC525704007495267BA66680E09641C90)] | | [removed: [34](#s43779132BB895EDCB818E308721BA907)] [added: [33](#sC525704007495267BA66680E09641C90)] |

| [removed: [8.](#s0247CC5E3357508D8D100EA24385F2A8)] [added: [8.](#sB32A64824D585D14AD22ECA9C26B5C22)] | | [Financial Statements and Supplementary [removed: Data](#s0247CC5E3357508D8D100EA24385F2A8)] [added: Data](#sB32A64824D585D14AD22ECA9C26B5C22)] | | [removed: [35](#s641F0DE539A55402A23DA63221FA9A01)] [added: [34](#s7D42BB071DBE585495BC4C408CCD189B)] |

| [removed: [9.](#s630D3AE3F2FA54188AAFEDAFF49DB03A)] [added: [9.](#s16095B9FC92653DD839F61CF0942E4B3)] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s630D3AE3F2FA54188AAFEDAFF49DB03A)] [added: Disclosure](#s16095B9FC92653DD839F61CF0942E4B3)] | | [removed: [75](#s630D3AE3F2FA54188AAFEDAFF49DB03A)] [added: [75](#s16095B9FC92653DD839F61CF0942E4B3)] |

| [removed: [9A.](#sDB9BBF54B53F5418A4DBD9F58A7193B7)] [added: [9A.](#sD21544E0D151533DA2213CB670A47EE9)] | | [Controls and [removed: Procedures](#sDB9BBF54B53F5418A4DBD9F58A7193B7)] [added: Procedures](#sD21544E0D151533DA2213CB670A47EE9)] | | [removed: [75](#sDB9BBF54B53F5418A4DBD9F58A7193B7)] [added: [75](#sD21544E0D151533DA2213CB670A47EE9)] |

| [removed: [9B.](#sDCBECAE8FFE75AB6AA5A2FB0F7068F2E)] [added: [9B.](#sA1CD0DF0D90C51DE8706284A0495475B)] | | [Other [removed: Information](#sDCBECAE8FFE75AB6AA5A2FB0F7068F2E)] [added: Information](#sA1CD0DF0D90C51DE8706284A0495475B)] | | [removed: [75](#sDCBECAE8FFE75AB6AA5A2FB0F7068F2E)] [added: [75](#sA1CD0DF0D90C51DE8706284A0495475B)] |

| | | [PART [removed: III](#sBB43623460075D4C8404690427FF958D)] [added: III](#s38E6D0D7E1FF56BD9FEB867B9D5975F4)] | | |

| [removed: [10.](#s8C2555572EEA521A95BFFEB982B5FB18)] [added: [10.](#sEB23BB82ADFF5F7F869A2648D9B80801)] | | [Directors, Executive Officers and Corporate [removed: Governance](#s8C2555572EEA521A95BFFEB982B5FB18)] [added: Governance](#sEB23BB82ADFF5F7F869A2648D9B80801)] | | [removed: [76](#s8C2555572EEA521A95BFFEB982B5FB18)] [added: [76](#sEB23BB82ADFF5F7F869A2648D9B80801)] |

| [removed: [11.](#sAEB9B852893B553AAC954BDE684F8928)] [added: [11.](#s8DC7BEB0C74954109601E4335E016A28)] | | [Executive [removed: Compensation](#sAEB9B852893B553AAC954BDE684F8928)] [added: Compensation](#s8DC7BEB0C74954109601E4335E016A28)] | | [removed: [76](#sAEB9B852893B553AAC954BDE684F8928)] [added: [76](#s8DC7BEB0C74954109601E4335E016A28)] |

| [removed: [12.](#sAA5A84A485D55DB7999877F6DE404735)] [added: [12.](#sD4D276648C70576EBD3F60F460D8B74D)] | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sAA5A84A485D55DB7999877F6DE404735)] [added: Matters](#sD4D276648C70576EBD3F60F460D8B74D)] | | [removed: [76](#sAA5A84A485D55DB7999877F6DE404735)] [added: [76](#sD4D276648C70576EBD3F60F460D8B74D)] |

| [removed: [13.](#s9109F49405075B02BE7CDCAA7CD490C9)] [added: [13.](#s7FE47A6C5E02514B8C8A58AFEAB3422E)] | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s9109F49405075B02BE7CDCAA7CD490C9)] [added: Independence](#s7FE47A6C5E02514B8C8A58AFEAB3422E)] | | [removed: [76](#s9109F49405075B02BE7CDCAA7CD490C9)] [added: [76](#s7FE47A6C5E02514B8C8A58AFEAB3422E)] |

| [removed: [14.](#sF433005FB29F50FC97C88286D5A76273)] [added: [14.](#s642FE6F7B8B7577E92540BFAD44F89BE)] | | [Principal Accountant Fees and [removed: Services](#sF433005FB29F50FC97C88286D5A76273)] [added: Services](#s642FE6F7B8B7577E92540BFAD44F89BE)] | | [removed: [76](#sF433005FB29F50FC97C88286D5A76273)] [added: [76](#s642FE6F7B8B7577E92540BFAD44F89BE)] |

| [removed: [15.](#s65DF204714D25FB7A844116350F13FC6)] [added: [15.](#s26CE5461F6235775BAC4F8FDB56AD9DE)] | | [Exhibits and Financial Statement [removed: Schedules](#s65DF204714D25FB7A844116350F13FC6)] [added: Schedules](#s26CE5461F6235775BAC4F8FDB56AD9DE)] | | [removed: [77](#s65DF204714D25FB7A844116350F13FC6)] [added: [77](#s26CE5461F6235775BAC4F8FDB56AD9DE)] |

| [removed: [16.](#s1A37830BF829561A924AC88636D9B8CF)] [added: [16.](#s8A4F884CF15B5CA0A8B494092A307869)] | | [Form 10-K [removed: Summary](#s1A37830BF829561A924AC88636D9B8CF)] [added: Summary](#s8A4F884CF15B5CA0A8B494092A307869)] | | [removed: [80](#s1A37830BF829561A924AC88636D9B8CF)] [added: [80](#s8A4F884CF15B5CA0A8B494092A307869)] |

10-K 1 mas_20181231x10k.htm 10-K

| | | [PART I](#s7706CAC881335EA6ABA5D27E60480DA4) | | |

| [1.](#s54A77B7845A7500598E25F9A7899CCA0) | | [Business](#s54A77B7845A7500598E25F9A7899CCA0) | | [2](#s54A77B7845A7500598E25F9A7899CCA0) |

| [2.](#s52A94371B7FB5A8F8F7A87A2A26B9146) | | [Properties](#s52A94371B7FB5A8F8F7A87A2A26B9146) | | [11](#s52A94371B7FB5A8F8F7A87A2A26B9146) |

| | | [PART II](#s8057011581CA5127A19977E5398C990C) | | |

| | | [PART IV](#sA344F8544AAE5EF18B35D0921540362B) | | |

| | | [Signatures](#sA9CC7B907D60502CA543293BA3BD0D6D) | | [81](#sA9CC7B907D60502CA543293BA3BD0D6D) |

10-K 1 mas_20171231x10k.htm 10-K

Yes þ No o

| | | [PART I](#sA451A154B5345530AC656ADBD7768325) | | |

| [1.](#sF917BF6645DD5288963EF4231A6C6C77) | | [Business](#sF917BF6645DD5288963EF4231A6C6C77) | | [2](#sF917BF6645DD5288963EF4231A6C6C77) |

| [2.](#s44BAD1F74F2254908E0B51551A68AD9A) | | [Properties](#s44BAD1F74F2254908E0B51551A68AD9A) | | [12](#s44BAD1F74F2254908E0B51551A68AD9A) |

| | | [PART II](#sDD6FDC5E38A457768BA7BBC3103A0C29) | | |

| | | [PART IV](#sFD75F2D71E7D56099F6E4EDB3B4137EF) | | |

| | | [Signatures](#sC5BCA78295D85EEABBEFFEB071E24318) | | [81](#sC5BCA78295D85EEABBEFFEB071E24318) |

| Decorative Architectural Products | | 8 | | | [removed: 11] [added: 18] | |

| Totals | | 48 | | | [removed: 25] [added: 32] | |

| Plumbing Products | | [removed: 11] [added: 10] | | | [removed: 20] [added: 19] | |

| Totals | | [removed: 20] [added: 19] | | | [removed: 20] [added: 19] | |

The New York Stock Exchange is the principal market on which our common stock is [removed: traded.][added: traded, under the ticker symbol MAS.]

On January 31, [removed: 2018,] [added: 2019,] there were approximately [removed: 3,700] [added: 3,400] holders of record of our common stock.

In May 2017, our Board of Directors authorized the repurchase, for retirement, of up to $1.5 billion of shares of our common stock in open-market transactions or [removed: otherwise, replacing the previous Board of Directors authorization established in 2014.][added: otherwise.]

During [removed: 2017,] [added: 2018,] we repurchased and retired [removed: 9.2] [added: 18.6] million shares of our common stock (including [removed: 0.9] [added: 0.7] million shares to offset the dilutive impact of long-term stock awards granted during the year), for approximately [removed: $331] [added: $654] million.

At December 31, [removed: 2017,] [added: 2018,] we had [removed: approximately $1.3 billion] [added: $636 million] remaining under the 2017 authorization.

The following table provides information regarding the repurchase of our common stock for the three-month period ended December 31, [removed: 2017.][added: 2018.]

The table below compares the cumulative total shareholder return on our common stock with the cumulative total return of (i) the Standard & Poor's 500 Composite Stock Index ("S&P 500 Index"), (ii) The Standard & Poor's Industrials Index ("S&P Industrials Index") and (iii) the Standard & Poor's Consumer Durables & Apparel Index ("S&P Consumer Durables & Apparel Index"), from December 31, [removed: 2012] [added: 2013] through December 31, [removed: 2017,] [added: 2018,] when the closing price of our common stock was [removed: $43.94.][added: $29.24.]

The graph assumes investments of $100 on December 31, [removed: 2012] [added: 2013] in our common stock and in each of the three indices and the reinvestment of dividends.

[removed: ][added: ]

The table below sets forth the value, as of December 31 for each of the years indicated, of a $100 investment made on December 31, [removed: 2012] [added: 2013] in each of our common stock, the S&P 500 Index, the S&P Industrials Index and the S&P Consumer Durables & Apparel Index and includes the reinvestment of dividends.

| | [removed: 2013 | | | |] 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | [added: | 2018 | | |]

| 10/1/18 - 10/31/18 | 2,305,692 | | | $ | 32.54 | | | 2,305,692 | | | $ | 860,879,098 | |

| 11/1/18 - 11/30/18 | 5,635,262 | | | $ | 31.24 | | | 5,635,262 | | | $ | 684,831,947 | |

| 12/1/18 - 12/31/18 | 1,652,685 | | | $ | 29.79 | | | 1,652,685 | | | $ | 635,603,772 | |

| Total for the quarter | 9,593,639 | | | | | | | 9,593,639 | | | $ | 635,603,772 | |

| Masco | $ | 112.29 | | | $ | 145.52 | | | $ | 164.64 | | | $ | 231.40 | | | $ | 155.74 | |

| S&P 500 Index | $ | 113.69 | | | $ | 115.26 | | | $ | 129.05 | | | $ | 157.22 | | | $ | 150.33 | |

| S&P Industrials Index | $ | 109.83 | | | $ | 107.04 | | | $ | 127.23 | | | $ | 153.99 | | | $ | 133.53 | |

| S&P Consumer Durables & Apparel Index | $ | 109.32 | | | $ | 108.49 | | | $ | 102.19 | | | $ | 121.18 | | | $ | 106.69 | |

The following table indicates the high and low sales prices of our common stock as reported by the New York Stock Exchange and the cash dividends declared per common share for the periods indicated:

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | Market Price | | | | | | | | Dividends Declared | | |

| Quarter | High | | | | Low | | | | | | |

| 2017 | | | | | | | | | | | |

| Fourth | $ | 44.44 | | | $ | 38.34 | | | $ | 0.105 | |

| Third | 39.15 | | | | 36.08 | | | | 0.105 | | |

| Second | 39.37 | | | | 32.97 | | | | 0.100 | | |

| First | 34.92 | | | | 31.29 | | | | 0.100 | | |

| Total | | | | | | | | | $ | 0.410 | |

| 2016 | | | | | | | | | | | |

| Fourth | $ | 35.07 | | | $ | 29.38 | | | $ | 0.100 | |

| Third | 37.38 | | | | 30.31 | | | | 0.100 | | |

| Second | 32.92 | | | | 29.11 | | | | 0.095 | | |

| First | 31.71 | | | | 23.10 | | | | 0.095 | | |

| Total | | | | | | | | | $ | 0.390 | |

| 10/1/17 - 10/31/17 (A) | 718,997 | | | — | | | | 718,997 | | | $ | 1,308,607,235 | |

| 11/1/17 - 11/30/17 | 487,316 | | | $ | 39.04 | | | 487,316 | | | $ | 1,289,581,762 | |

| 12/1/17 - 12/31/17 | — | | | — | | | | — | | | $ | 1,289,581,762 | |

| Total for the quarter | 1,206,313 | | | | | | | 1,206,313 | | | $ | 1,289,581,762 | |

| | |

| --- | --- |

| (A) | In August 2017, we entered into an accelerated stock repurchase transaction whereby we agreed to repurchase a total of $150 million of our common stock with an immediate delivery of 3.3 million shares. This transaction was completed in October 2017, at which time we received, at no additional cost, 0.7 million additional shares of our common stock resulting from changes in the volume weighted average stock price of our common stock over the term of the transaction. |

| Masco | $ | 138.48 | | | $ | 155.26 | | | $ | 200.79 | | | $ | 227.08 | | | $ | 318.46 | |

| S&P 500 Index | $ | 132.04 | | | $ | 149.89 | | | $ | 151.94 | | | $ | 169.82 | | | $ | 206.49 | |

| S&P Industrials Index | $ | 140.18 | | | $ | 153.73 | | | $ | 149.83 | | | $ | 177.65 | | | $ | 214.55 | |

| S&P Consumer Durables & Apparel Index | $ | 135.84 | | | $ | 148.31 | | | $ | 147.23 | | | $ | 138.82 | | | $ | 164.39 | |

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net [removed: Sales] [added: sales] (1) [added: (2)] | $ | [removed: 7,644] [added: 8,359] | | | $ | [removed: 7,357] [added: 7,642] | | | $ | [removed: 7,142] [added: 7,361] | | | $ | [removed: 7,006] [added: 7,142] | | | $ | [removed: 6,761] [added: 7,006] | |

| Operating profit (1) [added: (2) (3)] | [removed: 1,169] [added: 1,211] | | | | [removed: 1,053] [added: 1,194] | | | | [removed: 914] [added: 1,087] | | | | [removed: 721] [added: 914] | | | | [removed: 612] [added: 721] | | |

| Income from continuing operations attributable to Masco Corporation (1)(2) [added: (4)] | [removed: 533] [added: 734] | | | | [removed: 491] [added: 533] | | | | [removed: 357] [added: 493] | | | | [removed: 821] [added: 357] | | | | [removed: 259] [added: 821] | | |

| Income per common share from continuing [removed: operations:] [added: operations (2):] | | | | | | | | | | | | | | | | | | | |

| Basic | $ | [removed: 1.68] [added: 2.38] | | | $ | [removed: 1.49] [added: 1.68] | | | $ | [removed: 1.04] [added: 1.49] | | | $ | [removed: 2.31] [added: 1.04] | | | $ | [removed: 0.72] [added: 2.31] | |

| Diluted | [removed: 1.66] [added: 2.37] | | | | [removed: 1.47] [added: 1.66] | | | | [removed: 1.03] [added: 1.48] | | | | [removed: 2.28] [added: 1.03] | | | | [removed: 0.72] [added: 2.28] | | |

| Dividends declared | [removed: 0.410] [added: 0.450] | | | | [removed: 0.390] [added: 0.410] | | | | [removed: 0.370] [added: 0.390] | | | | [removed: 0.345] [added: 0.370] | | | | [removed: 0.300] [added: 0.345] | | |

| Dividends paid | [removed: 0.405] [added: 0.435] | | | | [removed: 0.385] [added: 0.405] | | | | [removed: 0.365] [added: 0.385] | | | | [removed: 0.330] [added: 0.365] | | | | [removed: 0.300] [added: 0.330] | | |

| Total assets [removed: (3)] [added: (2) (5)] | $ | [removed: 5,488] [added: 5,393] | | | $ | [removed: 5,137] [added: 5,534] | | | $ | [removed: 5,664] [added: 5,164] | | | $ | [removed: 7,208] [added: 5,664] | | | $ | [removed: 6,885] [added: 7,208] | |

| Long-term debt [removed: (3)] [added: (5)] | [removed: 2,969] [added: 2,971] | | | | [removed: 2,995] [added: 2,969] | | | | [removed: 2,403] [added: 2,995] | | | | [removed: 2,919] [added: 2,403] | | | | [removed: 3,421] [added: 2,919] | | |

| Shareholders' equity (deficit) [removed: (4)] [added: (2) (6)] | [removed: 176] [added: 69] | | | | [removed: (103] [added: 183] | | [removed: )] | | [removed: 58] [added: (96] | | [added: )] | | [removed: 1,128] [added: 58] | | | | [removed: 787] [added: 1,128] | | |

| [removed: (2)] [added: (4)] | The year 2014 includes a $529 million tax benefit from the release of the valuation allowance on deferred tax assets. |

| [removed: (3)] [added: (5)] | Total assets and long-term debt for [removed: the years 2013 and] 2014 [removed: have] [added: has] not been [removed: recasted] [added: recast] for the impact of the adoption of [removed: Accounting Standards Update] [added: ASU] 2015‑03 “Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs,” as amended by Accounting Standards Update 2015-15, which required the reclassification of certain debt issuance costs from an asset to a liability. |

| [removed: (4)] [added: (6)] | The decrease in shareholder's equity [removed: (deficit)] from 2014 to 2015 relates primarily to the spin off of TopBuild Corp. |

| (1) | Amounts exclude discontinued operations in the year 2014 and 2015. |

| (2) | Net sales, operating profit, income from continuing operations attributable to Masco Corporation, income per common share from continuing operations, total assets and shareholder's equity for 2014 and 2015 have not been recast for the impact of the adoption of Accounting Standards Codification 606. Refer to Note A to the consolidated financial statements for further information on the adoption of this standard. |

| (3) | Operating profit for 2014 and 2015 has not been recast for the impact of the adoption of Accounting Standards Update ("ASU") 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." Refer to Note A to the consolidated financial statements for further information on the adoption of this standard. |

| | |

| --- | --- |

| | |

| --- | --- |

| (1) | Amounts exclude discontinued operations. Refer to Note B to the consolidated financial statements for additional information. |

[removed: The] [added: Our] management [removed: of Masco Corporation] is responsible for establishing and maintaining adequate internal control over financial reporting.

[removed: Masco Corporation's] [added: Our] internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

[removed: The management of Masco Corporation] [added: We] assessed the effectiveness of [removed: the Company's] [added: our] internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO)] [added: ("COSO")] in "Internal Control – Integrated Framework." Based on this assessment, [removed: management has] [added: we have] determined that [removed: the Company's] [added: our] internal control over financial reporting was effective as of December 31, [removed: 2017.][added: 2018.]

PricewaterhouseCoopers LLP, an independent registered public accounting firm, performed an audit of [removed: the Company's] [added: our] consolidated financial statements and of the effectiveness of [removed: Masco Corporation's] [added: our] internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

Their report expressed an unqualified opinion on the effectiveness of [removed: Masco Corporation's] [added: our] internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] and expressed an unqualified opinion on [removed: the Company's 2017] [added: our 2018] consolidated financial statements.

We have audited the accompanying consolidated balance sheets of Masco Corporation and its subsidiaries [added: (the “Company”)] as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the related consolidated statements of operations, comprehensive income (loss), [removed: cash flows, and] shareholders’ equity [added: and cash flows] for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] including the related notes and [removed: the] financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December 31, [removed: 2017] [added: 2018] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal [removed: Control-Integrated] [added: Control - Integrated] Framework (2013) issued by the COSO.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control [removed: Over] [added: over] Financial Reporting appearing under Item 8.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [removed: ("PCAOB")] [added: (PCAOB)] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding [added: prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

December 31, [removed: 2017] [added: 2018] and [removed: 2016][added: 2017]

| | [added: 2018 | | | |] 2017 | | | | 2016 | | |

| Cash and cash investments | $ | [removed: 1,194] [added: 559] | | | $ | [removed: 990] [added: 1,194] | |

| Short-term bank deposits | [removed: 108] [added: —] | | | | [removed: 201] [added: 108] | | |

| Prepaid expenses and other | [removed: 96] [added: 5] | | | | [removed: 114] [added: 5] | | |

| Total current assets | [removed: 3,215] [added: 2,766] | | | | [removed: 2,934] [added: 3,263] | | |

| Property and equipment, net | [removed: 1,129] [added: 1,223] | | | | [removed: 1,060] [added: 1,129] | | |

| Goodwill | [removed: 841] [added: 898] | | | | [removed: 832] [added: 841] | | |

| Other intangible assets, net | [removed: 187] [added: 406] | | | | [removed: 154] [added: 187] | | |

| Other assets | [removed: 116] [added: $] | [added: 1] | | | [removed: 157] [added: $] | [added: —] | | [added: | $ | 1 | | | $ | — | |]

| Accounts payable | $ | [removed: 824] [added: 926] | | | $ | [removed: 800] [added: 824] | |

| Notes payable | [removed: 116] [added: 8] | | | | [removed: 2] [added: 116] | | |

| Accrued liabilities | [removed: 688] [added: (25] | | [added: )] | | [removed: 658] [added: (30] | | [added: )] |

| Total current liabilities | [removed: 1,628] [added: 1,684] | | | | [removed: 1,460] [added: 1,667] | | |

| Long-term debt | [removed: 2,969] [added: 2,971] | | | | [removed: 2,995] [added: 2,969] | | |

| Other liabilities | [removed: 715] [added: 669] | | | | [removed: 785] [added: 715] | | |

| Commitments and contingencies (Note [removed: S)] [added: T)] | | | | | | | |

| Masco Corporation's shareholders' equity: Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: [removed: 2017] [added: 2018] – [removed: 310,400,000; 2016] [added: 293,900,000; 2017] – [removed: 318,000,000] [added: 310,400,000] | [removed: 310] [added: 294] | | | | [removed: 318] [added: 310] | | |

| Preferred shares authorized: 1,000,000; Issued and outstanding: [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] – None | — | | | | — | | |

| Accumulated other comprehensive loss | [removed: (65] [added: (127] | | ) | | [removed: (235] [added: (65] | | ) |

| Total Masco Corporation's shareholders' deficit | [removed: (60] [added: (111] | | ) | | [removed: (298] [added: (53] | | ) |

| Noncontrolling interest | [removed: 236] [added: 180] | | | | [removed: 195] [added: 236] | | |

| Total liabilities and equity | $ | [removed: 5,488] [added: 5,393] | | | $ | [removed: 5,137] [added: 5,534] | |

For the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Selling, general and administrative expenses | [removed: 1,442] [added: 1,478] | | | | [removed: 1,403] [added: 1,418] | | | | [removed: 1,339] [added: 1,375] | | |

| Operating profit | [removed: 1,169] | | | | [removed: 1,053] | | | | [removed: 914] [added: $] | [added: 1,053] | | [added: | $ | 1,087 | |]

| Interest expense | [removed: (278] [added: (156] | | ) | | [removed: (229] [added: (278] | | ) | | [removed: (225] [added: (229] | | ) |

On March 9, 2018, we completed the acquisition of The L.D. Kichler Co. ("Kichler").

In connection with the integration of Kichler, we are in the process of analyzing and evaluating Kichler's internal control over financial reporting.

This process may result in additions or changes to our internal control over financial reporting.

In accordance with the Securities and Exchange Commission guidance, we have excluded the Kichler operations from the scope of our annual assessment of the effectiveness of internal control over financial reporting for the year ended December 31, 2018.

Such guidance allows for the omission of an assessment of an acquired business' internal control over financial reporting from the assessment of internal control over financial reporting for a period not to exceed one year.

Kichler is a wholly-owned subsidiary whose total assets and net sales excluded from our assessment represent approximately 5% and 4%, respectively, as of and for the year ended December 31, 2018.

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 8, management has excluded The L.D. Kichler Co. (Kichler) from its assessment of internal control over financial reporting as of December 31, 2018 because it was acquired by the Company in a purchase business combination during 2018.

We have also excluded Kichler from our audit of internal control over financial reporting.

Kichler is a wholly-owned subsidiary whose total assets and net sales excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 5% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018.

February 7, 2019

| Receivables | 1,153 | | | | 1,066 | | |

| Inventories | 946 | | | | 784 | | |

| Prepaid expenses and other | 108 | | | | 111 | | |

| Total assets | $ | 5,393 | | | $ | 5,534 | |

| Total liabilities | 5,324 | | | | 5,351 | | |

| Retained deficit | (278 | | ) | | (298 | | ) |

| Total equity | 69 | | | | 183 | | |

| Net sales | $ | 8,359 | | | $ | 7,642 | | | $ | 7,361 | |

| Cost of sales | 5,670 | | | | 5,030 | | | | 4,899 | | |

| Gross profit | 2,689 | | | | 2,612 | | | | 2,462 | | |

| Operating profit | 1,211 | | | | 1,194 | | | | 1,087 | | |

| | (169 | | ) | | (310 | | ) | | (255 | | ) |

| Income before income taxes | 1,042 | | | | 884 | | | | 832 | | |

| Net income attributable to Masco Corporation | $ | 734 | | | $ | 533 | | | $ | 493 | |

| Net income attributable to Masco Corporation | $ | 734 | | | $ | 533 | | | $ | 493 | |

| | (17 | | ) | | 29 | | | | (10 | | ) |

| Increase in receivables | (46 | | ) | | (140 | | ) | | (132 | | ) |

| Proceeds from the exercise of stock options | 14 | | | | — | | | | — | | |

| Cumulative effect of adoption of new revenue recognition accounting standard | 5 | | | | | | | | | | | | 5 | | | | | | | | | | |

| Balance, January 1, 2016 | 63 | | | | 330 | | | | — | | | | (295 | | ) | | (165 | | ) | | 193 | | |

| Reclassification of disproportionate tax effects (Refer to Note A) | — | | | | | | | | | | | | 59 | | | | (59 | | ) | | | | |

| Repurchased | (654 | | ) | | (19 | | ) | | (26 | | ) | | (609 | | ) | | | | | | | | |

| Balance, December 31, 2018 | $ | 69 | | | $ | 294 | | | $ | — | | | $ | (278 | ) | | $ | (127 | ) | | $ | 180 | |

We recognize revenue as control of our products is transferred to our customers, which is generally at the time of shipment or upon delivery based on the contractual terms with our customers, or when services are completed.

Control over certain of our custom-made window products transfers to our customers as production is completed, and revenue is recognized over the production period for these products, as our products do not have an alternative use and we have an enforceable right to payment during the production period.

The production period of our custom-made window products generally does not lapse days, and for these products we currently recognize revenue based on the output of production, which is a faithful depiction of the transfer of these products to our customers.

Our customers' payment terms generally range from 30 to 65 days of fulfilling our performance obligations and recognizing revenue.

These customer programs and incentives are considered variable consideration.

We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved.

This determination is made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives.

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

February 8, 2018

| Receivables | 1,021 | | | | 917 | | |

| Inventories | 796 | | | | 712 | | |

| Total assets | $ | 5,488 | | | $ | 5,137 | |

| Total liabilities | 5,312 | | | | 5,240 | | |

| Retained deficit | (305 | | ) | | (381 | | ) |

| Total equity (deficit) | 176 | | | | (103 | | ) |

| | | | | | | | | | | | |

| Net sales | $ | 7,644 | | | $ | 7,357 | | | $ | 7,142 | |

| Cost of sales | 5,033 | | | | 4,901 | | | | 4,889 | | |

| Gross profit | 2,611 | | | | 2,456 | | | | 2,253 | | |

| | (284 | | ) | | (223 | | ) | | (225 | | ) |

| Income from continuing operations | 580 | | | | 534 | | | | 396 | | |

| Loss from discontinued operations, net | — | | | | — | | | | (2 | | ) |

| Income from continuing operations | $ | 1.68 | | | $ | 1.49 | | | $ | 1.04 | |

| Loss from discontinued operations, net | — | | | | — | | | | (0.01 | | ) |

| Income from continuing operations | $ | 1.66 | | | $ | 1.47 | | | $ | 1.03 | |

| Loss from discontinued operations, net | — | | | | — | | | | (0.01 | | ) |

| Income from continuing operations | $ | 533 | | | $ | 491 | | | $ | 357 | |

| Loss from discontinued operations, net | — | | | | — | | | | (2 | | ) |

| | 29 | | | | (10 | | ) | | (14 | | ) |

| Increase in receivables | (127 | | ) | | (120 | | ) | | (104 | | ) |

| Cash distributed to TopBuild Corp. | — | | | | — | | | | (63 | | ) |

| Issuance of TopBuild Corp. debt | — | | | | — | | | | 200 | | |

| Credit Agreement and other financing costs | — | | | | — | | | | (3 | | ) |

| Balance, January 1, 2015 | $ | 1,128 | | | $ | 345 | | | $ | — | | | $ | 690 | | | $ | (111 | ) | | $ | 204 | |

| Repurchased | (456 | | ) | | (17 | | ) | | (65 | | ) | | (374 | | ) | | | | | | | | |

| Separation of TopBuild Corp. | (828 | | ) | | | | | | | | | | (828 | | ) | | | | | | | | |

We recognize revenue as title to products and risk of loss is transferred to customers or when services are rendered, net of applicable provisions for discounts, returns and allowances.

Customer Promotion Costs.

Accounting for Global Intangible Low-taxed Income ("GILTI").

In our consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified.

In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value, as opposed to the lower of cost or market.

In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which requires the tax effects related to share-based payments to be recorded through the income statement, simplifies the accounting requirements for forfeitures and employers' tax withholding requirements, and modifies the presentation of certain items on the statement of cash flows.

We adopted ASU 2016-09 on January 1, 2017, using the retrospective options for reclassifying excess tax benefit from stock-based compensation and employee withholding taxes paid on stock-based compensation within our statements of cash flows.

As a result of this adoption, we increased cash flows from (for) operating activities and decreased cash flows from (for) financing activities by $63 million and $111 million for the years ended December 31, 2016 and 2015, respectively.

Subsequent to adoption, tax effects related to employee share-based payments were recorded to income tax expense, thus increasing the volatility in our effective tax rate.

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business," which narrows the definition of what constitutes a business for acquisition and divestiture purposes.

We early adopted ASU 2017-01 effective October 1, 2017.

[removed: | a. | Evaluation] [added: a.Evaluation] of Disclosure Controls and Procedures. [removed: |]

The Company's Principal Executive Officer and Principal Financial Officer have concluded, based on an evaluation of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 that, as of December 31, [removed: 2017,] [added: 2018,] the Company's disclosure controls and procedures were effective.

[removed: | b. | Management's] [added: b.Management's] Report on Internal Control over Financial Reporting. [removed: |]

[removed: | c. | Changes] [added: c.Changes] in Internal Control over Financial Reporting. [removed: |]

In connection with the evaluation of the Company's internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2017,] [added: 2018,] which is required under the Securities Exchange Act of 1934 by paragraph (d) of Exchange Rules 13a-15 or 15d-15 (as defined in paragraph (f) of Rule 13a-15), management determined that there was no change that materially affected or is reasonably likely to materially affect internal control over financial reporting.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

During the second quarter of 2018, we will implement a new Enterprise Resource Planning (“ERP”) system at Delta Faucet Company ("Delta").

The system implementation is designed, in part, to enhance the overall system of internal control over financial reporting through further automation and improve business processes, and is not in response to any identified deficiency or weakness in the Company’s internal control over financial reporting.

However, this system implementation is significant in scale and complexity and will result in modification to certain internal controls at Delta.

| | |

| --- | --- |

Other information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders, to be filed [removed: on or] before May 1, [removed: 2018,] [added: 2019,] and such information is incorporated herein by reference.

| | |

| --- | --- |

Information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders, to be filed [removed: on or] before May 1, [removed: 2018] [added: 2019] and such information is incorporated herein by reference.

| | |

| --- | --- |

The following table sets forth information as of December 31, [removed: 2017] [added: 2018] concerning the 2014 Plan, which was approved by our stockholders.

The remaining information required by this Item will be contained in our definitive Proxy Statement for our [removed: 2018] [added: 2019] Annual Meeting of Stockholders, to be filed [removed: on or] before May 1, [removed: 2018,] [added: 2019,] and such information is incorporated herein by reference.

| Equity compensation plans approved by stockholders | 3,740,874 | | | $ | 21.25 | | | 14,733,746 | |

| Equity compensation plans approved by stockholders | 5,275,505 | | | $ | 16.10 | | | 15,389,166 | |

| | |

| --- | --- |

Information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders, to be filed [removed: on or] before May 1, [removed: 2018,] [added: 2019,] and such information is incorporated herein by reference.

| | |

| --- | --- |

Information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders, to be filed [removed: on or] before May 1, [removed: 2018,] [added: 2019,] and such information is incorporated herein by reference.

| | |

| --- | --- |

| (1) | Financial Statements. Our consolidated financial statements included in Item 8 hereof, as required at December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] consist of the following: |

| [Consolidated Balance [removed: Sheets](#sDC02C7AE3947533088FFB0675B2F8FD7)] [added: Sheets](#sD6620CABA31E5AF1A23B92420CA5E7B0)] | [removed: [38](#sDC02C7AE3947533088FFB0675B2F8FD7)] [added: [37](#sD6620CABA31E5AF1A23B92420CA5E7B0)] |

| [Consolidated Statements of [removed: Operations](#s4D910CBCB77C58C48C3EB34EB00AB2EA)] [added: Operations](#sE4027FC999965FF5A8E41557BEB8A9BA)] | [removed: [39](#s4D910CBCB77C58C48C3EB34EB00AB2EA)] [added: [38](#sE4027FC999965FF5A8E41557BEB8A9BA)] |

| [Consolidated Statements of Comprehensive Income [removed: (Loss)](#s95075B0941D15987BBB0F194558CBC1B)] [added: (Loss)](#s1C22DAE292C95EEDBC1445FFFA08085B)] | [removed: [40](#s95075B0941D15987BBB0F194558CBC1B)] [added: [39](#s1C22DAE292C95EEDBC1445FFFA08085B)] |

| [Consolidated Statements of Cash [removed: Flows](#s20FC209F2EB154C49F9559193A358289)] [added: Flows](#sB35ECA523A2A5CE09420E0F412A6BE7F)] | [removed: [41](#s20FC209F2EB154C49F9559193A358289)] [added: [40](#sB35ECA523A2A5CE09420E0F412A6BE7F)] |

| [Consolidated Statements of Shareholders' [removed: Equity](#s71B44C8F3DB259EDBC58B21506590096)] [added: Equity](#s3955952793F858DD829D9EE79AAEA099)] | [removed: [42](#s71B44C8F3DB259EDBC58B21506590096)] [added: [41](#s3955952793F858DD829D9EE79AAEA099)] |

| [Notes to Consolidated Financial [removed: Statements](#sCF3971EB505853F7A0EBAC9474D3CC2D)] [added: Statements](#s922A6F707E5B5BEBB61350753C6F5AE2)] | [removed: [43](#sCF3971EB505853F7A0EBAC9474D3CC2D)] [added: [42](#s922A6F707E5B5BEBB61350753C6F5AE2)] |

Our Financial Statement Schedule appended hereto, as required for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] consists of the following:

| [II. Valuation and Qualifying [removed: Accounts](#sA7E96B6A3346556EAF94B1E1B470950A)] [added: Accounts](#sCBD40522D02C5CF8AABFA19EC6BCF668)] | [removed: [83](#sA7E96B6A3346556EAF94B1E1B470950A)] [added: [83](#sCBD40522D02C5CF8AABFA19EC6BCF668)] |

| [removed: [4.a.i](http://www.sec.gov/Archives/edgar/data/62996/000104746914000923/a2218121zex-4_aii.htm)] [added: [4.a.i](http://www.sec.gov/Archives/edgar/data/62996/000104746915000803/a2222936zex-4_aiii.htm)] | | | | [removed: 6.625%] [added: 7-3/4%] Debentures Due [removed: April 15, 2018; and] [added: August 1, 2029.] | | [removed: 2013] [added: 2014] 10-K | | [removed: 4.a.i(i)] [added: 4.a.i(ii)] | | [removed: 02/14/2014] [added: 02/13/2015] | | |

| [removed: [4.b.i](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit4bi.htm)] [added: [4.b.i](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit4bi.htm)] | | | | 6-1/2% Notes Due August 15, 2032; | | | [added: 2017 10-K] | | [added: 4.b.i] | | [added: 02/08/2018] | | [removed: X] |

| [removed: [10.a](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10ai.htm)] [added: [10.a](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10ai.htm)] | | Credit Agreement dated as of March 28, 2013 by and among Masco Corporation and Masco Europe S. à r.l. as borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and Royal Bank of Canada, Deutsche Bank Securities, Inc., PNC Bank, National Association, and SunTrust Bank as Co-Documentation Agents, as amended by Amendment No. 1 dated as of May 29, 2015, and Amendment No. 2 dated as of August 28, 2015. | | | | | [added: 2017 10-K] | | [added: 10.a] | | [added: 02/08/2018] | | [removed: X] |

| Note 2: | | Exhibits 10.b through [removed: 10.l] [added: 10.m] constitute the management contracts and executive compensatory plans or arrangements in which certain of the Directors and executive officers of the Company participate. | | | | | | | | | | | |

| [removed: [10.b.i](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bi.htm)] [added: [10.b.i](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bi.htm)] | | | | for awards on or after January 1, 2013; and | | | [added: 2017 10-K] | | [added: 10.b.i] | | [added: 02/08/2018] | | [removed: X] |

| [removed: [10.b.iii](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biii.htm)] [added: [10.b.iii](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biii.htm)] | | | | for grants on or after January 1, 2013; | | | [added: 2017 10-K] | | [added: 10.b.iii] | | [added: 02/08/2018] | | [removed: X] |

| [removed: [10.b.iv](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biv.htm)] [added: [10.b.iv](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biv.htm)] | | | | for grants during 2012; and | | | [added: 2017 10-K] | | [added: 10.b.iv] | | [added: 02/08/2018] | | [removed: X] |

| [removed: [10.b.vi](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_biii.htm)] [added: [10.b.vi](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bviii.htm)] | | Non-Employee Directors Equity Program under Masco Corporation's 2005 Long Term Stock Incentive Plan [removed: (Amended October] [added: (for awards prior to] 2010): | | | | | [removed: 2015] [added: 2017] 10-K | | [removed: 10.b.iii] [added: 10.b.viii] | | [removed: 02/12/2016] [added: 02/08/2018] | | |

| [removed: [10.b.vii](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bvii.htm)] [added: [10.c.viii](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cviii.htm)] | | | | Form of Restricted Stock Award [added: Agreement] for [added: Non-Employee Directors for] awards [removed: 2010 through 2012.] [added: after July 1, 2018.] | | | | | | | | X |

| [removed: [10.b.viii](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bviii.htm)] [added: [10.c.vi](http://www.sec.gov/Archives/edgar/data/62996/000006299616000041/exhibit10b63016.htm)] | | Non-Employee Directors Equity Program under Masco Corporation's [removed: 2005] [added: 2014] Long Term Stock Incentive Plan [removed: (for awards prior to 2010):] [added: (Amended and Restated May 9, 2016):] | | | | [added: 10-Q] | | [added: 10.b] | | [added: 07/26/2016] | | [removed: X] |

| [removed: [10.b.ix](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bix.htm)] [added: [10.b.vii](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bix.htm)] | | | | Form of Stock Option Grant [removed: Agreement.] [added: Agreement for Non-Employee Directors.] | | [added: 2017 10-K] | | [added: 10.b.ix] | | [added: 02/08/2018] | | [removed: X] |

| [10.c.i](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10b.htm) | | | | [removed: Form of Restricted Stock Award Agreement;] [added: for awards prior to July 1, 2018;] and | | 8-K | | 10.b | | 05/06/2014 | | |

| [removed: [10.c.ii](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10d.htm)] [added: [10.c.iii](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10d.htm)] | | | | [removed: Form of Stock Option Grant Agreement;] [added: for grants prior to July 1, 2018;] and | | 8-K | | 10.d | | 05/06/2014 | | |

| [removed: [10.c.iii](http://www.sec.gov/Archives/edgar/data/62996/000006299617000019/exhibit10formoflongterminc.htm) | |] [added: [10.c.v](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cv.htm)] | | Form of Long Term Incentive Program [removed: Award.] [added: Award] | | [removed: 10-Q] | | [removed: 10] | | [removed: 04/25/2017] | | | [added: | X |]

| [removed: [10.c.v](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10c.htm)] [added: [10.c.vii](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10c.htm)] | | | | Form of Restricted Stock Award Agreement for Non-Employee [removed: Directors.] [added: Directors for awards prior to July 1, 2018; and] | | 8-K | | 10.c | | 05/06/2014 | | |

| [removed: [10.d](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10d.htm)] [added: [10.d](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10d.htm)] | | Form of award letter for the Masco Corporation Long-Term Cash Incentive Program. | | | | [added: 2017 10-K] | | [added: 10.d] | | [added: 02/08/2018] | | [removed: X] |

| [10.e](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_dii.htm) | | Form of Masco Corporation Supplemental Executive Retirement and Disability Plan and amendments thereto for Richard A. Manoogian. | | | | 2015 10-K | | [removed: 10.d(i)] [added: 10.d.i(i)] | | 02/12/2016 | | |

| [10.f](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_diii.htm) | | Form of Masco Corporation Supplemental Executive Retirement and Disability Plan and amendments thereto (includes amendment freezing benefit accruals) for John G. Sznewajs. | | | | 2015 10-K | | [removed: 10.d(ii)] [added: 10.d.i(ii)] | | 02/12/2016 | | |

| [removed: [10.h](http://www.sec.gov/Archives/edgar/data/62996/000006299617000008/exhibit10h.htm)] [added: [10.h](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10h.htm)] | | Compensation of Non-Employee Directors. | | | | [removed: 2016 10-K] | | [removed: 10.h] | | [removed: 02/09/2017] | | [added: X] |

| [removed: [10.j.ii](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10jii.htm)] [added: [10.j.ii](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10jii.htm)] | | Aircraft Time Sharing Agreement dated October 1, 2012 between Richard A. Manoogian and Masco Corporation. | | | | [added: 2017 10-K] | | [added: 10.j.ii] | | [added: 02/08/2018] | | [removed: X] |

| [removed: [21](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit21123117.htm)] [added: [21](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit21123118.htm)] | | List of Subsidiaries. | | | | | | | | X |

| [removed: [23](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit23123117.htm)] [added: [23](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit23123118.htm)] | | Consent of Independent Registered Public Accounting Firm relating to Masco Corporation's Consolidated Financial Statements and Financial Statement Schedule. | | | | | | | | X |

| [removed: [31.a](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/masco-ex31ax123117.htm)] [added: [31.a](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/masco-ex31ax123118.htm)] | | Certification by Chief Executive Officer required by Rule 13a-14(a)/15d-14(a). | | | | | | | | X |

| [removed: [31.b](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/masco-ex31bx123117.htm)] [added: [31.b](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/masco-ex31bx123118.htm)] | | Certification by Chief Financial Officer required by Rule 13a-14(a)/15d-14(a). | | | | | | | | X |

| [removed: [32](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/masco-ex32x123117.htm)] [added: [32](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/masco-ex32x123118.htm)] | | Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. | | | | | | | | X |

| | | Form of Restricted Stock Award Agreements: | | | | | | | | | | |

| [10.c.ii](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cii.htm) | | | | for awards on or after July 1, 2018. | | | | | | | | X |

| | | Form of Stock Option Grant Agreements | | | | | | | | | | |

| [10.c.iv](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10civ.htm) | | | | for grants on or after July 1, 2018. | | | | | | | | X |

| [10.m](http://www.sec.gov/Archives/edgar/data/62996/000006299618000062/exhibit1009302018.htm) | | Employment Offer Letter dated July 27, 2018 between Scott McDowell and Masco Corporation. | | 10-Q | | 10 | | 10/30/2018 | | |

| | |

| --- | --- |

| | |

| --- | --- |

| [2](http://www.sec.gov/Archives/edgar/data/62996/000110465915049824/a15-15043_1ex2d1.htm) | | Separation and Distribution Agreement dated June 29, 2015.1 | | | | 8-K | | 2.1 | | 07/06/2015 | | |

| [4.a.ii](http://www.sec.gov/Archives/edgar/data/62996/000104746915000803/a2222936zex-4_aiii.htm) | | | | 7-3/4% Debentures Due August 1, 2029. | | 2014 10-K | | 4.a.i(ii) | | 02/13/2015 | | |

| 1 | The schedules to this agreement are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to supplementally furnish to the Securities and Exchange Commission, upon request, a copy of any omitted schedule. |

| [10.c.iv](http://www.sec.gov/Archives/edgar/data/62996/000006299616000041/exhibit10b63016.htm) | | Non-Employee Directors Equity Program under Masco Corporation's 2014 Long Term Stock Incentive Plan (Amended and Restated May 9, 2016): | | | | 10-Q | | 10.b | | 07/26/2016 | | |

| [10.m](http://www.sec.gov/Archives/edgar/data/62996/000110465915049824/a15-15043_1ex10d1.htm) | | Tax Matters Agreement dated June 29, 2015. | | 8-K | | 10.1 | | 07/06/2015 | | |

| [10.n](http://www.sec.gov/Archives/edgar/data/62996/000110465915049824/a15-15043_1ex10d2.htm) | | Transition Services Agreement dated June 29, 2015. | | 8-K | | 10.2 | | 07/06/2015 | | |

| [10.o](http://www.sec.gov/Archives/edgar/data/62996/000110465915049824/a15-15043_1ex10d3.htm) | | Employee Matters Agreement dated June 29, 2015. | | 8-K | | 10.3 | | 07/06/2015 | | |

| [12](https://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit12123117.htm) | | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. | | | | | | | | X |

[removed: February 8,] [added: |] 2018 [added: | | $ | 13 | | | $ | 6 | | | $ | — | | | | $ | (5 | ) | | (a) | $ | 14 | |]

| /s/ Keith [added: J.] Allman | | [removed: President,] [added: President] and Chief Executive Officer and Director | | |

| Keith [added: J.] Allman | | | | |

| Mark R. Alexander | | | February [removed: 8, 2018] [added: 7, 2019] | |

For the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

| Allowances for doubtful accounts, deducted from accounts receivable in the balance [removed: sheet (e):] [added: sheet:] | | | | | | | | | | | | | | | | | | | | | | |

| 2017 | | $ | 45 | | | $ | — | | | $ | 2 | | | [removed: (b)] [added: (c)] | $ | — | | | | $ | 47 | |

| 2016 | | $ | 49 | | | $ | 11 | | | $ | — | | | | $ | (15 | ) | | [removed: (c)] [added: (d)] | $ | 45 | |

| [removed: (b)] [added: (c)] | $2 million adjustment to the valuation allowance was recorded primarily in other comprehensive income (loss). |

| [removed: (c)] [added: (d)] | Write off $13 million of deferred tax assets on certain state and local net operating loss carryforwards against the valuation allowance, as it was determined that there was only a remote likelihood that such carryforwards could be utilized; and, $2 million adjustment to the valuation allowance was recorded primarily in other comprehensive income (loss). |

February 7, 2019

| 2018 | | $ | 47 | | | $ | — | | | $ | — | | | | $ | (4 | ) | | (b) | $ | 43 | |

| (b) | $3 million net reduction to valuation allowance recorded as an income tax benefit and $1 million reduction recorded primarily in other comprehensive income (loss). |

| /s/ Mary Ann Van Lokeren | | Director | | |

| Mary Ann Van Lokeren | | | | |

| 2015 | | $ | 14 | | | $ | 4 | | | $ | — | | | | $ | (7 | ) | | (a) | $ | 11 | |

| 2015 | | $ | 66 | | | $ | 36 | | | $ | — | | | | $ | (53 | ) | | (d) | $ | 49 | |

| | |

| --- | --- |

| (d) | Valuation allowance on deferred tax assets allocated to TopBuild due to its spin off into a separate stand-alone company on June 30, 2015. |

| (e) | Amounts exclude discontinued operations. |